About OAQDA

The role of the Ohio Air Quality Development Authority is to provide for the conservation of air as a natural resource of the state to prevent or abate the pollution of the air, to provide for the comfort, health, safety and general welfare of all citizens of the state and to assist in the financing of air quality facilities for industry, commerce, and research.

The Authority’s power is drawn from its enabling legislation, found in ORC Chapter 3706. OAQDA has the authority to:

1. issue air quality revenue bonds, notes and refunding bonds;
2. make loans and grants to governmental agencies for the acquisition and construction of air quality facilities
3. make loans for air quality projects for industry, commerce, distribution or research, including public utility companies;
4. acquire, construct and operate air quality facilities itself; and,
5. engage in research and development with respect to air quality facilities.

Its primary purpose is to contribute to cleaner air in Ohio by assisting Ohio businesses to invest in air quality through the provision of conduit financing for the purchase, construction and/or installation of air quality facilities.

STRUCTURE OF AUTHORITY

OAQDA consists of seven members. Five public members are appointed by the Governor with the advice and consent of the Senate. No more than three members may belong to the same political party.

Each member’s term of office is eight years. The terms are staggered. The two remaining members serve ex-officio. They are the Director of the Ohio Environmental Protection Agency and the Director of the Ohio Department of Health.

The Authority elects from its appointed members a chairperson and a vice-chairperson. The secretary-treasurer is elected, but need not be a member of the authority.

POTENTIAL BENEFITS OF OAQDA FINANCING

As is true of any financing project, benefits derived from any mechanism will be specific to that project. Each project applying for OAQDA financing must analyze and determine the specific benefits that may accrue.

In general, financing air pollution control equipment and facilities through OAQDA results in a number of direct benefits.

Bond financing is available for up to forty (40) years. The exact term of a specific bond is determined by market and tax analysis as well as the useful life of the equipment. Utility bond issues have averaged between 25 and 30 years in length. Frequently, the structure of bond financing allows the debt to be financed over a longer period than might otherwise be allowed.

OAQDA bonds are still eligible for state and local tax-exempt status. For issues sold entirely within the state, this may result in a decrease in the interest rate.

In addition, for certain specifically defined portions of air quality facilities, it may be possible to qualify for federally tax-exempt status.

The principal benefits are exemptions from the following:

• Real property tax assessment.
• Ohio’s tangible personal property tax.
• Sales and use tax for purchase of any qualified equipment; and,
• Franchise tax calculation

All exemptions are 100% and are for the life of the loan.

ELIGIBILITY

The definition of eligibility can be found in the Ohio Revised Code, Section 3706.01 (G). This legislation describes exactly what can be financed through OAQDA. The key portion follows:

(1) Any method, modification or replacement of property, process, device, structure, or equipment that removes, reduces, prevents, contains, alters, conveys, stores, disperses, or disposes of air contaminants or substances containing air contaminants, or that renders less noxious or reduces the concentration of air contaminants in the ambient air, including, without limitation, facilities and expenditures that qualify as air pollution control facilities under section 103 (C)(4)(F) of the Internal Revenue Code of 1954, as amended, and regulations adopted thereunder;

(2) Motor vehicle inspection stations operated in accordance with, and any equipment used for motor vehicle inspections conducted under, section 3704.14 of the Revised Code and rules adopted under it;

(3) Ethanol or other biofuel facilities, including any equipment used at the ethanol or other biofuel facility for the production of ethanol or other biofuels;

(4) Any property or portion thereof used for the collection, storage, treatment, utilization, processing, or final disposal of solid waste resulting from any method, process, device, structure, or equipment that removes, reduces, prevents, contains, alters, conveys, stores, disperses, or disposes of air contaminants, or that renders less noxious or reduces the concentration of air contaminants in the ambient air;

(5) Any property, device, or equipment that promotes the reduction of emissions of air contaminants into the ambient air through improvements in the efficiency of energy utilization or energy conservation.

In addition, it is useful to note the definition of eligible costs for these projects:

“Cost” as applied to an air quality project means the cost of acquisition and construction, the cost of acquisition of all land, rights-of-way, property rights, easements, franchise rights, and interests required for such acquisition and construction, the cost of demolishing or removing any buildings or structures may be moved, the cost of acquiring any lands to which such buildings or structures may be moved the cost of acquiring or constructing and equipping a principal office and sub-offices of the authority, the cost of diverting highways, interchange of highways, and access roads to private property, including the cost of public utility and common carrier relocation or duplication, the cost of all machinery, furnishings, and equipment, financing charges, interest prior to and during construction and for no more than eighteen months after completion of construction, engineering, plans, specifications, surveys, studies, estimates of cost and revenues, working capital, other expenses necessary or incident to determining the feasibility or practicability of acquiring or constructing such project, administrative expense, and such other expense as may be necessary or incident to the acquisition or construction of the project, the financing of such acquisition or construction, including the amount of authorized in the resolution of the authority providing for the issuance of air quality revenue bonds to be paid into any special funds from the proceeds of such bonds, and the financing of the placing of such project in operation. Any obligation, cost, or expense incurred by any governmental agency or person for surveys, borings, preparation of plans and specifications, and other engineering services, or any other cost described above, in connection with the acquisition or construction of a project may be regarded as a part of the cost of that project and may be reimbursed out of the proceeds of air quality revenue bonds as authorized by this chapter.

All definitions and other provisions of OAQDA financing should be carefully reviewed in ORC 3706.